With few changes in industry sector outlooks, the first three months of 2013 were the least volatile quarter since the end of 2008, says credit rating agency Moody’s Investors Service.
In a report published Thursday, Moody’s indicates that the changes to sector outlooks that did take place in the first quarter indicate an overall improvement in the global economy, albeit not a dramatic one. The outlook for about two-thirds of all non-financial corporate sectors remained stable during the first quarter. Of those that changed, the outlook for global beverages and global paper and forest products moved from stable to positive, and the outlook for North American apparel dropped from positive to stable.
“Non-financial industries globally have shown an increasingly becalmed reaction to ongoing macroeconomic turmoil and pressures,” says Moody’s managing director, Mark Gray. “Only in mid-2010 did the pace of volatility slow to that registered in the first quarter of this year.”
Gray notes that the global paper market has seen a standout improvement, particularly in North America. “Demand from the resurgent homebuilding sector has breathed life back into the North American forest products sector, while rationalization and higher prices will give paper companies a welcome boost over the next one to two years,” he says.
Lower input prices and increased sales in emerging markets are boosting the global beverage sector; whereas higher costs, particularly for cotton, labour and freight, is dimming the growth prospects for the North American apparel sector.
Moody’s says that the distribution of positive and negative outlooks has remained nearly flat since the second half of 2011, whereas negative outlooks outnumbered positive outlooks by a factor of 11 during the global economic crisis. Still, it cautions that several factors could upset the current balance, including a deeper-than-expected recession in Europe and a slowdown in major emerging markets; geopolitical conflicts are seen as only a limited risk, it adds.